The transit industry has been adopting bank-issued payment cards at a rapid rate. Such payment cards are accepted at locations where access to a transit service is obtained, such as subway turnstiles, bus fareboxes, and the like. An access agency, such as a transit authority, controls access to the transit service. Payment cards are popular with patrons of transit services because the cards eliminate the need to carry cash for fare payment, and are popular with access agencies because the cards can speed the transaction process and reduce financial losses. Such cards are also popular with access agencies in allied industries that have a need to control access to facilities, such as museums and similar attractions, amusement parks, event venues, and the like.
Typically, an access agency establishes a business relationship with a card issuer, such as a bank or other financial institution, and arranges for patrons to be issued payment cards that can be used at access agency locations. The card issuer establishes an account with each patron for whom a payment card will be issued, and controls issuance, authorization, and payment processing on the patron's account. Thus, a patron of the transit authority or other access agency becomes an account holder with respect to the card issuer, and the payment card is personal to that individual patron. A typical arrangement between card issuers and account holders may permit the card issuer to charge fees directly to the account, or card issuer fees may be charged to the sponsoring access agency and either passed on to the patron or absorbed by the agency.
Transit payment cards are often of the contactless variety. In fact, such payment “cards” may not be cards at all, but may comprise payment tokens, smart cards, smart phones, and other such portable consumer devices. Smart phones, for example, may have stored data relating to the user account such that the smart phone can communicate wirelessly with access points such as contactless readers at turnstiles and fareboxes. Such communications may occur, for example, over communication networks such as Bluetooth or the like. Such payment-enabled portable consumer devices are configured to interface with the transit agency access points, including turnstiles and fareboxes, with short-duration data exchanges to facilitate the need for passing quickly through access points that is typical for the transit environment.
Bank-issued payment cards are issued by financial institutions, such as banks, who are members of an acquirer organization, such as Visa U.S.A. Inc. An issuing bank attends to account administration and has the authority and responsibility to approve or disapprove each transaction. Payment processing, involving the actual data processing operations and transfer of funds, may occur through the acquirer organization. Incentive programs, discounts, limited-time offers, and other special processing are easily handled by either the issuer or the acquirer. As noted above, an account for each transit patron to be issued a payment card is established by the issuing bank.
The transit environment inherently serves a large population of patrons that either do not possess or cannot acquire a bank card from a financial institution, or do not have a card of the right “type”, for example a contactless payment card. The trend in the transit industry is to accept bank-issued payment cards directly at the farebox or turnstile, and often this may be further restricted to only payment cards of the contactless variety. Without a bank-issued contactless payment card, this segment of patrons may not be able to take advantage of all fare discounts, loyalty incentives, or features that other patrons might enjoy because they are able to obtain a bank-issued contactless payment card.
To better serve patrons who might not be able to obtain a payment card or who may not want to obtain one, transit authorities and other access agencies are turning to using prepaid cards. Prepaid cards in this context are bank-issued cards with corresponding user accounts associated with preloaded funds that are decremented with each use of the card. A prepaid card may be a non-reloadable or anonymous card that is provided with a beginning value or initial funding amount that is decremented with each use of the card down to a zero amount. The card is disposed of when the funding balance reaches zero. Such cards may be anonymous cards in the sense that they do not require the cardholder to maintain a bank relationship. Any person who presents the card at an access agency location is entitled to use the funding balance associated with the card. Other pre-paid cards may be associated with re-loadable accounts. These accounts may be re-loaded through many mechanisms, including the “Visa ReadyLink” system of Visa U.S.A., Inc., or through a payroll direct deposit system, or through employee-administered benefits management systems, or through kiosks located at access stations or other public locations, or various retail locations such as convenience stores, all of which support adding value to the account associated with the card to keep it active with funds. As noted above, these accounts are generally administered by the issuing bank associated with the card.
While use of this type of pre-paid card in transit may necessitate a contactless capability on the card, these cards will often also have a magnetic stripe as well that allows their use in traditional retail environments as well.
Issues have been identified with pre-paid cards to be used in transit as they relate to the cost, mechanisms, and processes of issuance/distribution of these cards, as well as the fees that typically get assessed to the cardholder. Issuance of these pre-paid cards is typically accomplished by member banks or other third parties that have relationships with the banks to sponsor such issuance. These parties typically make their return on investment by assessing various fees to the cardholder, such as through issuance or card acquisition fees, use or transaction fees, load or re-load fees, customer service fees, and monthly fees. Patrons who might not be able to obtain such cards are typically very sensitive to being charged such fees on top of fares for access transactions.
From the discussion above, it should be apparent that there is a need for payment processing in connection with access transactions that can accommodate patrons who might not qualify for conventional bank-issued payment cards or may not wish to obtain one. The present invention satisfies this need.